What is AS4000? An Introduction to AS4000-1997 for Client Side Project Managers

In the Australian construction industry, engaging construction companies on standard contractual frameworks such as those provided by Standards Australia is common practice. The AS 4000-1997 General Conditions of Contract (or nickname, AS4000 or AS 4000-1997) is a very well-used contract throughout the construction industry.

This article is written for client side project managers as an introduction to the AS4000 General Conditions of Contract and the critical process of managing progress claims / payment claims under this contract.

What is AS4000?

AS4000, or AS 4000-1997, is a set of General Conditions for Construction contracts developed by Standards Australia. AS4000, like most construction contracts, takes the form of a very very long A4 Microsoft Word document that reads like it was written by a construction lawyer (because it is 😂). Also, yes, the 1997 is actually referring to the year 1997!

The 1997 release was actually an improvement to an even older contract and talked about in this old looking newsletter from the Australian Construction Law Newsletter.  We make fun of it here in a blog 'Why is AS 4000-1997 so old and what does it have in common with Harry Potter?'.

Despite its age, the flexibility and comprehensive nature of AS4000 make it suitable for various capital works projects, from infrastructure to buildings, and it often operates on lump sum.

AS4000 is designed to provide a balanced legal foundation for the contractual relationship between:

• The Principal (the party commissioning the construction project, i.e. the Project's Owner);
• The Contractor (the party undertaking the construction work, which they call 'WUC' - work under the Contract).

AS4000 is built on a framework of mutual rights and obligations and it covers a wide range of contractual facets. However, the execution of work, payments, variations and dispute resolution are prevalent.

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What is Superintendent in AS4000?

AS4000 is administered by a third role, the Superintendent, aiming to foster fair dealing and efficiency in executing construction projects. Overall, the contract is neutral and does not inherently favour either party but the Superintendent does have meaningful power hence the name 'super'! 😎.

If you are a client side project manager, pay attention here! The Superintendent (i.e. you) is not really a party to the contract. The Superintendent is more a role occupied by a person named in the contract, which the Principal and the Contractor give certain functions to under that contract.

In a contract like AS4000, it is generally implied term that the Superintendent will act fairly and in good faith. There is a strong argument that if the Superintendent does not act fairly towards the Contractor, this could constitute a breach of contract by the Principal.

Basic Features of AS4000  

1. Fixed price /Lump sum price. The contractor is required to execute the work for a fixed price within a fixed timeframe. Changes to the contract price are a variation.‍
2. Variations. The contract prescribes a process for dealing with variations, which must be directed in writing.
3. ‍Payment. The contractor shall claim payment progressively (progress claim) in accordance with the schedule.‍
4. Fixed timeframe. The contractor must ensure the works are completed by an agreed ‘date for practical completion’. Else, liquidated damages will apply.
5. ‍‍Extensions of time. The contractor may claim extensions of time to the date for practical completion if it is delayed by a qualifying cause, such as an act or omission by the principal.‍‍‍
6. Provisional sums. The parties can agree on a provisional sum where the design of part of the works is not sufficiently developed to enable the contractor to provide a fixed price. The price of these items is adjusted once the final cost is known.‍
7. Latent Conditions.  The contract provides entitlement to an extension of time and/or additional payment where the Contractor encounters site conditions that differ from those at time of tender.

Payment Under AS4000

Progress Claims are a key feature of AS4000 under Clause 37: Progress Payments. Clause 37 outlines how a contractor can seek payment for work completed to date under the terms of the contract. Within the AS4000 framework, Progress Claims are governed by specific clauses that outline the submission, assessment, and payment process, ensuring transparency and fairness for both parties.

1. Submission of Progress Claims

Under AS4000, contractors must submit Progress Claims at intervals agreed upon in the contract. These claims must detail the work completed during the claim period and the corresponding amount due. The submission must follow the format and requirements specified in the contract, including any necessary documentation to support the claim. Contractors should also follow the relevant Security of Payment Act requirements when submitting a progress claim.

2. Assessment of Progress Claims

Upon receipt of a Progress Claims, the Principal or Superintendent is tasked with assessing the Claim. This involves verifying the work completed and ensuring it aligns with the contract requirements. The assessment should be conducted on time to keep the project moving, but AS4000 gives 14 days after receiving the Progress Claim to issue the Progress Certificate. The Progress Certificate document outlines the amount to be paid in response to the Progress Claim and the basis for any adjustments or rejections.  

3. Disputing a Progress Certificate

The Progress Certificate should be provide by the Superintendent to both the Principal and the Contractor. If either party disputes the Progress Certificate (most likely the amount), they are required under to take certain steps quickly to dispute that Progress Certificate. If there is no dispute, the Principal then becomes contractually obliged to make the Progress Payment to the Contractor, in accordance with that Progress Certificate, within the number of days as set out in the Contract.

4. Payment

Once the contractor has received a Progress Certificate, an invoice will be issued with both the Progress Claim and Progress Certificate to the principal, and payment must then be made within seven days.

Navigating Disputes

Despite the fairness intended by the AS4000 clauses, disputes may arise, particularly with Progress Claims and work completed. The contract outlines dispute resolution mechanisms, including negotiation, mediation, and arbitration, to resolve such issues. Parties are encouraged to seek resolution through these mechanisms, as they offer a structured approach to address disagreements without resorting to litigation.

AS4000 Contract Templates

These templates are relevant to AS4000 and provide valuable resources that will help with better understanding Payment under AS4000.

• How to Submit Progress Claims Under Clause 37 of AS4000
• How to Submit a Progress Claim Under the SOPA
• How to Respond to a Progress Claim Under the Security of Payment Act
• What is Security of Payment Act and How It Affects Construction Contracts
• Payment Claim Template Checklist for Security of Payment ACT
• Payment Claim Template
• Capital Project Cost Tracker in Excel

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AS4000 Payment Templates

Simpler, faster, digital workflows & certificate tools are available to client side project managers / Superintendents to avoid suffering through heavy contract administration and Payment tasks using spreadsheets and word processing tools. Construction industry progressionals administering AS4000 and Payments can save administration time, increase their accuracy and achieve total compliance with AS 4000. Take a look at these available tools:

• Contract & Payments Tool
• AS4000 Digital Contract & Payment Tool
• All Standard Form contracts with Digital Contract & Payment Tools
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Reporting on AS4000

Mastt provides a comprehensive platform designed to enhance Contract Administrators on capital projects using AS4000. Here’s how Mastt can assist:

1. Dashboards and Reporting Automated: Mastt's dashboard offers a centralized view of all project activities, helping project managers track progress and manage tasks effectively.
2. Documentation and Tracking: The platform provides tools for documenting and tracking all project-related information, ensuring that everything is recorded and managed systematically.
3. Contract Management & Administration: Mastt allows Project Managers to digitally administer Standard Form Contracts like AS4000, AS4300, AS4902, AS2124 and Defene Standard Form Contracts to automate Payment, Variation and other clauses.
4. Security of Payments Act: Mastt provides compliance tools to ensure Payment Claims and Payment Certificates are compliant with SOPA.
5. Budget & Forecasting: Mastt helps project managers stay on top of budgets and cash flow forecasting by providing real-time insights and analytics.
6. ‍Risk Management: By offering robust risk management tools, Mastt enables construction managers to identify and mitigate risks early, ensuring projects stay on track.
7. Stakeholder Collaboration: Mastt enhances communication and collaboration between the project owner, contractors, and other stakeholders, ensuring that everyone is aligned and informed.

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Conclusion

Despite being created in 1997, the AS4000 general conditions of contract is still a well-used contract (though, at times, heavily amended) for managing construction projects in Australia under lump sum. Client side project managers administering an AS4000 contract should pay attention to their specific contract requirements and stay on top of payments to keep the capital project moving forward.

Further reading on AS4000 Contracts and Project Control Groups

Standard Form Construction Contracts are often an agenda item on Project Control Group meetings and within PCG Reports. Learn more about everything PCG related below.

• What is a Project Control Group? Understanding the Role of PCG in Capital Project Management
• The Best PCG Report for PCG Meetings in 2024
• What to Include in a PCG Report (Traditional)
• What to Wear to a PCG Meeting: A Guide for Client Side Project Managers

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Disclaimer: While Mastt is dedicated to offering valuable industry insights, it's important to note that we are not legal experts. Therefore, our content should not be interpreted as legal advice. We encourage readers to exercise discretion and seek personalized guidance from qualified legal professionals.